Good morning! Todayās edition unpacks another ridiculous earnings report from Nvidia, the freshly inverted yield curve, and more. First time reading? Join 190,000 self-directed investors gaining an edge every morning. Sign up here.Ā
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Nvidia delivers big
If the Federal Reserve dictates the cost of money, then Nvidia determines the amount of hype in financial markets.Ā
The AI bellwether delivered on earnings once again Wednesday, smashing Wall Streetās expectations and reaffirming its status as the most important name in both the stock market and artificial intelligence.Ā
āDemand for Blackwell is amazing as reasoning AI adds another scaling law ā increasing compute for training makes models smarter and increasing compute for long thinking makes the answer smarter,ā said CEO Jensen Huang.Ā
Hereās what the company reported for the fiscal quarter ending in January:Ā
Earnings per share: $0.89, up 71% from a year ago, beating forecasts
Quarterly sales: $39.3 billion, up 78% from a year ago, beating forecasts
Quarterly profits: $22 billion, up 72% from a year ago, beating forecasts
Full-year revenue: $130.5 billion, up 114% year-over-year, beating forecasts
Nvidiaās outlook, too, impressed Wall Street, with first-quarter revenue for fiscal 2026 forecasted to hit roughly $43 billion.Ā
āWeāve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter,ā Huang said. āAI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionize the largest industries.ā
Nvidiaās impact, of course, extends beyond its own balance sheet.
Its chips provide the oxygen to the AI economy while its dominance dictates how trillions of dollars in capital are allocated across markets.Ā
3 takeaways from the blowout results
Data center domination: Nvidiaās $35.6 billion in data center revenue, a 93% increase from a year ago, reinforces that spending on AI infrastructure remains robust. This ā alongside President Trumpās $500 billion Project Stargate ā should quell concerns that Chinaās DeepSeek will slow demand for chips and capital.
Blackwellās smashing records: The next-gen chip generated $11 billion in revenue in the quarter, calling it the āfastest product rampā in Nvidiaās history. Huang said demand for Blackwell chips is āamazingā and that upcoming AI models will require even more computing power, not less.
The stock is still priced to perfection: Blowout results did not fuel stock gains overnight, which suggests investors may still be uneasy about Nvidiaās valuation. One red flag, too, is that gross margins declined amid the shift to higher-cost, more complex products.
For the bulls, these earnings confirmed that AI spending isnāt slowing down and Nvidia will continue to be the prime beneficiary of the arms race.Ā
For the bears, the stock's tepid reaction and margin pressures suggest that even perfection may not be enough to justify Nvidiaās sky-high valuations forever.Ā
Shares of Nvidia are up about 65% over the last 12 months.
Elsewhere:
šThe bond market is flashing a warning. The 10-year Treasury yield passed below that of the 3-month note on Wednesday, known as an inverted yield curve. Investors remain concerned on how President Trumpās ambitious economic agenda will impact inflation, growth and geopolitics. The previous yield curve inversion happened October 2022, but was not followed by a recession. (CNBC)
šĀ Moderna stock tumbled after hours. Shares fell over 5% following a report that the Health and Human Services Department was reevaluating its $590 million contract for developing a bird flu vaccine. The funding was awarded in the final days of Bidenās administration, and currently the US is in the midst of a outbreak of bird virus. (Barronās)
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Rapid-fire:
Snowflake stock climbed after projecting higher-than-expected revenue growth for the year ahead (Bloomberg)
President Trump said EU tariffs are coming soon and could be around 25% (BBC)
Salesforce stock tumbled overnight after missing on revenue and issuing weak guidance (CNBC)
Failed crypto exchange FTX has paid nearly $1 billion in bankruptcy fees, the most since Lehman (Bloomberg)
Paramount Global reported streaming growth with 5.6 million new subscribers in the latest quarter (WSJ)
Instacart stock tanked 12% Wednesday for its worst day ever following a fourth-quarter earnings miss (CNBC)
US-traded shares of Anheuser-Busch Inbev soared 7.2% for their best daily gain in over three years after strong earnings (WSJ)
š° Iām Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. Iāve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.
I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you wonāt find anywhere else. Feedback? Write me at phil@openingbellmedia.com, reply directly to this email, or ping me on X @philrosenn.
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